Intel Corporation (NASDAQ:INTC) has been upgraded from Sector Perform to Outperform by RBC Capital today.
RBC Capital Analyst Price Prediction For Intel Corporation (INTC)
RBC Capital analyst Doug Freedman and his team predict a price target of $29.00 (from $24.00). Such an increase could be attributed due to enhanced 2013 gross margins, increasing traction of Intel Corporation (NASDAQ:INTC)’s ultra-mobile platform, and an all-time bottom with PC sentiment.
RBC Capital’s analysts assign Intel Corporation (NASDAQ:INTC) outperform rating as their checks suggest mobile is garnering plenty of interest. They feel traction in mobile is upcoming, as the magnitude of design wins may be surprising to investors. We feel that even ahead of a more compelling leading-edge 14nm line-up in 2014, Intel is today receiving a lot of interest from OEM’s.
Intel Corporation (NASDAQ:INTC)’s stock closed yesterday at $23.96 on volume of 30.1 million shares, below average daily volume of 51.2 million. Intel is currently priced 2.2 percent above its average consensus analyst price target of $23.42. According to SmartTrend analysts, Intel should discover initial support at its 200-day moving average (MA) of $22.30 and subsequent support at its 50-day MA of $21.87.
Last week Intel Corporation (NASDAQ:INTC) announced that the board of directors had unanimously elected Brian Krzanich as its next chief executive officer, succeeding Paul Otellini. Krzanich will become the sixth CEO in Intel’s history. Krzanich has been Intel’s chief operating officer since January 2012, and has progressed through a series of technical and leadership roles since joining Intel in 1982.
RBC Capital’s analysts feel the appointment has the potential for visible changes sooner than most expect with software and a move to become a more vertical company becoming a greater part of Intel’s future.
Doug Freedman and his team feel the disappointing Q1 data from Gartner and IDC corroborate an all-time low PC sentiment. The analysts modeled a 5 percent year-on-year decline in units. They believe that lower price-points, MSFT XP/Office 2003 EOL and shorter replace cycles could curb further unit declines. RBC Capital’s analysts foresee limited downside from current expectations on the PC front and Intel is in the early innings of benefiting in a growing Tablet market.
On the gross margin front, Doug Freedman and his team believe that due to the roll-off of start-up costs and bonus back of inventories, gross margins can move higher with limited revenue growth in 2HCY13. This would raise the analyst’s gross margin assumption for 2013 to 60.7 percent as against Street’s estimates of 59.2 percent.
The analysts also view Intel Corporation (NASDAQ:INTC)’s process technology would enable increasing presence in the low-power market vs. ARM. Besides they anticipate more significant traction in server ahead of a very encouraging mobile ramp with OEM’s becoming increasingly interested given dependence on QCOM.
RBC Capital’s analysts anticipate Intel Corporation (NASDAQ:INTC) shares to trade with a 12x to 13x gaap multiple over the next 12 months due to favorable factors such as:
1) expected higher long term gross margins,
2) potential success in the faster growth tablets and handsets market.
